Menu

PONG and Atari -
The Entrepreneur Builds An Industry

Atari 1972

Videogaming’s Killer App

Nolan Bushnell misses the ball with his Computer Space, the flaccid-selling coin-op video game he makes for Nutting Associates in 1971. At least the futuristic fiberglass cabinet design is a hit though, as the game shows up as a prop near the beginning of the seminal cheesy 1973 SF movie Soylent Green, as a gift given to Joseph Cotten’s female “furniture”, the mistress character played by co-star Leigh Taylor Young.

Despite the inability of his first product to really catch on with the public, Nutting Associates asks Bushnell to take a shot at developing another game. He is unable to reach an equitable agreement with management, however, and Bushnell leaves to create his own company with partner Ted Dabney. Their intention is to design the games and then have a large game company actually produce them. The initial venture capital is $250 from Bushnell and $250 from Dabney, their profits from Computer Space. They plan to christen the new company with the uncomfortable label Syzygy, an term from astronomy meaning cosmic bodies in perfect alignment, such as the Sun, Earth and Moon. Computer Space had sported the label “Designed by Syzygy”. But history thanks the hippies running a candle-making commune that has already registered the name. Unable to purchase the rights to the name from the current Syzygy, over beer and a game of the Japanese game of stones called Go, they scour terms from the game as possible company names. Thus, Bushnell presents a list of three terms from Goto the California Secretary of State, the state corporation regulatory body, as potential company names, in this order: “Sente”, meaning to move first, “Atari” which is the equivalent of “check” in the game Chess, meaning you’re about to take an opponent’s piece, and “Hane”, to bend around an opponent’s stone with your own pieces. Sente is also already registered, but Atari is free so that is the name that goes through. The company is officially established on June 27, 1972, by a 27 year old Bushnell.

“Avoid Missing Ball For High Score”

The first product is to be a driving game, and 25-year old Al Alcorn, the engineer Ampex had hired to replace Bushnell, is lured over from the company to join Atari and build it. Deciding instead to break Alcorn in with what in Bushnell’s mind is a throwaway experiment, he asks him to build a simplistic Ping-Pong game, where players control paddles knocking a ball back and forth across the screen. Bushnell prods Alcorn along by telling him the company already has a contract with General Electric to distribute it. There is no such contract. Though Bushnell’s design demands impossible-for-the-day sound effects like a roaring crowd, Alcorn pulls beeps and blips that are already present in the circuitry for the sound…and when Alcorn describes the noise of the ball hitting the paddles, he inadvertently names the game…PONG. The electronic guts are entirely solid-state and hardwired…no ROMs or microprocessors are present. This baby is made to do one thing and one thing only, play PONG. Bushnell makes sure you only need one hand to do it, so bar patrons can hold their beer in the other. After much agonizing about various minutia such as the speed of the ball and how fast the spin-dial control moves the paddles, a prototype system is constructed by Alcorn.

Alcorn at the 25th Anniversary of the C64, Computer History Museum 2007

The instructions for the world’s next arcade videogame are legendarily simple: “AVOID MISSING BALL FOR HIGH SCORE”. Everybody in the lab has so much fun playing the game that it is decided to try and market it, although it is seen as a stepping stone…Bushnell plans to quickly leave PONG behind and build a “real”, more complex game. He goes on a trip to Chicago to try and sell pinball giant Bally on the PONG concept. In one of history’s great corporate blunders, they blow him off, totally misreading the potential of videogames. Undeterred, Bushnell decides to test the waters by installing the prototype in a local Sunnyvale, California watering hole called Andy Capp’s Tavern. Later Alcorn gets an irate call from the bartender telling him that the game is broken and to “get the fucking thing out of here”. When he arrives at the bar to examine it, he discovers that the machine doesn’t work because the coin mechanism has been filled with so many quarters that it is overflowing and shorting out the machine. In 1979 this location for the first PONG beta test becomes a comedy club called Rooster T. Feathers, where a sign on the wall will proudly trumpet its role in video game history, although they mis-label PONG as the “very first” video arcade game.

A Smash

With the evidence of the game’s success overflowing from the prototype’s coin bucket, Bushnell thus decides Atari will build PONG itself. He rents a 25,000-square foot, abandoned roller skating rink in Santa Clara, California and hires a few dozen locals. By late 1972 Atari is cranking out big blue and yellow PONG cabinets. The game is a smash, pulling in $300 a week in quarters, where pinball machines at the time average $40. Atari sells 8,500 machines in one year, at a time when 2,000 pinball games is considered a successful run. The PONG cabinets have a production cost of 500 dollars per unit and a sales price of $1,200 each. The game Bushnell considered a quickie knock-off will carry his company for the next two years. With success comes the need for some company branding, so freelance artist George Opperman is commissioned to create a new logo. Meant to represent a stylized “A” for Atari, his design also plays on the idea of two video game players facing off, with the PONG net between them. The design becomes known as the Atari “Fuji”, due to it evoking Japan’s famous Mt. Fuji. Opperman later heads up Atari’s Graphic Design group.

The following year sees the start of a trend that will dog the industry forever more…a flood of imitations following in the wake of a hit game. Literally dozens of PONG clones hit the market…makers including Nutting Associates, Bushnell’s old employer.

4-player PONG clone by Midway, 1973. Gotta love the subliminal colouring of the women on this flyer

Even old-time billiards and bowling champ Brunswick gets in on the action with 1973′s Astrohockey. That same year Dabney sells his half of the company to Bushnell, rattled by all the new competition, most of whom have bigger cash reserves and larger presences in the entertainment sector. Atari, though, is the clear market leader, pulling in $3.2 million in video game sales for that year. Bushnell realizes that the only way to compete is to out-innovate the bigger players. Strong competition in this regard comes with rival Kee Games, headed by Joe Keenan. Several key Atari employees defect to Kee, including early Atari engineer Steve Bristow. In 1974 the company releases Tank, designed by Bristow. Gameplay consists of two tanks facing off in a maze, while trying to avoid land mines scattered about. The game breaks new technical ground by incorporating ROM chips to hold graphics memory, enabling it to display more complicated detail on-screen than the simple square blocks of PONG. Tank becomes the biggest hit of 1974, and it is revealed that Kee is actually a secret subsidiary of Atari, set up to circumvent a holdover from the pinball era where regional distributors demanded exclusive rights to a company’s games. The enormous success of Tank kills all that, as every distributor wants to get their hands on it. The same year of the game’s release, Kee and Atari ‘merge’ back into one company, with Joe Keenan as president of Atari and Bushnell in charge of engineering. The company goes on to follow up Tank with three sequels, including 1978′s UltraTank, which allows players to battle the computer, if there isn’t another human tank driver handy. It also offers eight different options in game play to players, including different play fields, mines scattered about, bouncing or guided shells, as well as a “camouflage” mode where the tanks only appear when firing or when hit. Eight is also the number of people who can play Tank 8 simultaneously, a game allowing eight players to stand around the unit with their own controls and battle against each other. Other games manufactured by Atari under the Kee label are:

PONG Bounces Home

In 1974 Atari employees Bob Brown and Harold Lee propose a home version of PONG, able to be hooked up to any TV set. Lee, Brown and Alcorn produce the system, giving it the codename Darlene and starting a long Atari engineering department tradition of naming systems after female co-workers. However, retailers are skittish over the lack of fire ignited by Magnavox’s TV-based Odyssey game, and system languishes in the Atari labs. In 1975 they cut a deal with Tom Quinn, head purchaser for the sporting goods department at national retailer Sears, to sell the system under the Sears Tele-Games label. The order is for 150,000 units. Bushnell has nowhere near the facilities to produce that many in the time Sears wants them, so he taps venture capitalist Don Valentine for a $10 million line-of-credit to expand. By Christmas, Atari’s $100 home PONG console becomes Sears biggest selling item, with reports of people waiting outside stores for hours to get one. And once again, manufacturers swarm out of the woodwork, this time with myriad versions of home PONG games. Around $250 million worth of PONG-type games for the TV are sold by various manufactures in 1975., with prices ranging from $60 to $120 depending on what game options are available, or whether the display is B&W or colour. The simple table-tennis game is expanded to include hockey, handball, multiplayer doubles tennis, skeet shooting with a light gun, among other offerings.

This newfangled electronic Ping Pong thing comes home, 1975

Pinouts for the GI AY-3-8606-1 “PONG-On-A-Chip” IC

APF pong game in the pages of the 1978 Montgomery Wards Xmas catalog

1979 Sears Xmas Wishbook featuring PONG games

PONG On A Chip

By 1976, the market has expanded from two companies involved in home video games to over 70, all making clones of Atari’s home game. This insane ballooning of the number of game manufacturers is facilitated by the new AY-3-8500 “PONG-On-A-Chip” LSI (Large-Scale Integration) microchip released by General Instrument Corp early in 1976. The single videogame integrated chip (IC) had been developed at the GI Glenrothes plant in Scotland in 1975, at the behest of Finnish TV manufacturer Salora Oy for use in a new TV design. As the popularity of GI’s game IC spread around Europe in a PAL TV version, work on a NTSC version for North American use was begun in Hicksville, NY. The IC incorporates all of the circuitry needed for a videogame, including sound, and offers these games: tennis, soccer, squash and a one-player practice mode of handball, along with two rifle-shooting games. It also provides character generation for scoring, as well as externally selectable bat sizes and ball speed. Steep or shallow return angles can also be adjusted, and the choice of manual or automatic serving is also available. At a cost of $5 to $6 per chip, depending on volume pricing, the rush on this IC is so intense that only Coleco receives their full shipment order in time to mass manufacture a large enough supply of videogame units for sale over the 1976 Christmas season. The release of its Telstarvideo table tennis unit, retailing for half as much as Atari’s console, increases the company’s overall sales by 65 percent. Other game makers sell every console they can produce in 1976, helping to move about 3,390,000 units and creating estimated sales of $187 million dollars for the year. In 1977 General Instrument is producing between 1 to 1.2 million PONG ICs per month. Later updates to the chip result in the faster AY-3-8606-1 “PONG” IC.

Warner Serves Up a Deal

In 1975 Atari pulls in 40 million dollars for the year, marking it as a hot high-tech company. In 1976 it draws the attention of Emanuel Gerard, a member of CEO Steve Ross’ inner-circle at huge media conglomerate Warner Communications. Gerard is part of a team, titled “Office of the President”, which is tasked by Ross to seek out possible acquisitions for Warner. With Atari making impressive revenues but run by a team of creatives lacking in big industry savvy, it seems a no-brainer to Gerard to pick it up. Atari has also come to the personal attention of Ross in 1976, via a trip to Disneyland in California. Unable to pull his family members away from a Tank 8 game in the arcade there, Ross quickly realizes the profit potential in electronic games. At Atari, Nolan Bushnell sees the glut of similar products flooding the market, and knows his company has to out-innovate in order to stay on top. He has created a new consumer products division within Atari, but to make the next big moves in the market he needs access to a vast amount of cash. The stock market of the mid-70′s is no place to try and raise cash for a small company, so when conglomerate Warner comes calling with a deal, Bushnell jumps in it. On October 1, 1976, he signs the contract to sell Atari to Warner for $28 million, with Joe Keenan as President and Bushnell pocketing $16 million and the title of CEO. This new infusion of capital is applied to the development of a project inside Atari that will revolutionize the way people play games, and render the market the company itself had created for dedicated PONG games obsolete. It will soon launch the videogame industry into the mainstream and make the name Atari as ubiquitous as Coke and Kleenex. This project’s codename? Stella.

Thanks. Pong pretty much started the whole industry, although Atari only made a fraction of all the Pong-type games that flooded the market in the wake of their success.

I worked for Atari during all of this and left after Warner took over. Lots of good memories!!! i wish they would include and give credit to one of their important and creative engineers Doug Robinson aka Robinson, he was a very important part in the success of Atari!